Economics

Efficiency in sequential partnerships

Article Abstract:

A study determined how efficiency can be achieved in sequential partnerships, where production is commonly shared and controlled. In this partnerships, agents receive non-verifiable information regarding the actions of predecessor agents. A budget-balanced sharing rule that can ensure efficient production in these partnerships was presented. This rule is simple, does not require unlimited liability although it uses limited punishments, and does not depend on a message game. Finally, this rule creatively utilizes efficient production, and is robust to renegotiation.

Efficiency in partnerships with joint monitoring

Article Abstract:

The achievement of efficient budget balance and limited liability remains possible under partnerships with joint monitoring. Budget balance and limited liability efficiency can be attained provided that there are at least three players, wherein one of them can monitor the activity of another player. Strategies used in attaining efficiency are proven effective in solving problems related to mechanism design.